International Approaches for the Digital Age

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Controlling Technological innovation in Finance: Global Methods for the Digital Age

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Opening Remarks by Deputy Managing Director Bo Li

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November 10, 2021

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Superior morning. I hope you are all healthful and perfectly. It is a great pleasure to welcome you to this really topical panel discussion on “Managing Technological innovation in Finance: Worldwide Strategies for the Digital Age.” I am joined by a panel of eminent specialists who will present further insights into the difficulties.

 

Technological modify has very long been a driver of human progress. And the monetary sector has been no exception. From the improvement of double-entry e-book-retaining, to the introduction of ATMs and fashionable payment systems—each wave of innovation has remaining its mark.

 

The electronic age has accelerated these developments:

  • In depth info on our actions, transactions, and behaviors are now being captured in huge amounts as the World-wide-web Of Things and mobile connectivity have exploded close to the world.
  • Large boosts in computing electric power applied to this facts are making Synthetic Intelligence—or “AI”—less of a Hollywood motion picture fantasy. And, a lot more and a lot more, AI devices conduct tasks that generally demand human intelligence.
  • In the meantime, the information is loaded with tales of the latest hack of computer devices and ensuing reduction of services and particular info.

These traits are intertwined technologically, but we are only starting to have an understanding of lots of of the difficulties. From the point of view of financial regulators, the critical question is how to reap the benefits of technological know-how in phrases of financial inclusion, efficiency, risk administration, and oversight, although concurrently controlling the money stability and integrity threats.

 

In 3 separate and modern papers, IMF staff members have identified strong complementarities throughout these problems. They point to the have to have for adapting coverage methods and regulation to these new troubles, and to the need for enhanced cross-border cooperation to handle threats that do not have nationwide boundaries. Soon, we will check out these topics even more with the panel today, but permit me now spotlight briefly the results from these 3 workstreams.

 

Very first, on the digital economy and information.

 

In today’s digital age, data has grow to be a worthwhile, globally moveable superior. But transferring it across borders requires nations around the world to have coherent policies that develop rely on. With out international concepts for taking care of data, we could experience deepening electronic fault traces among nations, as huge info pools develop into progressively isolated. This would be in particular expensive for lesser and decreased-earnings countries. The good thing is that a short while ago G7 nations have announced some essential concepts for cross-border movement of facts, and that is a incredibly excellent get started.

 

Our details can electric power open finance and AI that can make societies extra productive, driving advancement, employment, and finance. But there are also dim sides. Information can be captured with no our successful consent by big platforms—creating new monopolies and stability threats, and posing worries to nations around the world to harmony person privacy with requires to defend info from cyber assaults.

 

These troubles have significant implications for progress, security, and the international method, which are at the main of the IMF’s mandate and means international cooperation is wanted to deal with them. Right now, our panel will discuss how policymakers can deal with essential problems about details and the electronic financial state that span economic steadiness and inclusion, opposition, and privacy.

 

Next, on AI and device understanding.

 

The adoption of these technologies in the monetary sector has accelerated in new years and is now significantly reaching. Speedy adoption of AI and machine mastering in finance can maximize performance, improve the consumer experience, and fortify chance administration. They also energy the instruments utilized by regulators to bolster prudential oversight and help the implementation of monetary and macroprudential policies. Imagine of a lot more effective supply chains, or lending to beforehand unbanked small enterprises close to the world.

 

But these systems also convey dangers, such as from opacity, bias, and the scope for new sources of systemic chance, together with from better interconnectedness. Policymakers will have to have to confront these troubles as they consider prospective regulatory approaches. And, as we will focus on shortly, the comprehensive extent of the strengths and weaknesses connected with these systems is nevertheless to be fully comprehended.

 

Third, on cyber hazard.

 

The profusion of data and electronic platforms that connect the environment has also greater possibilities for malicious cyber hackers to disrupt sectors that rely on electronic systems. Just one of the unwanted results of the new digital economic climate and developments in technological innovation is that it widens the assault surface, particularly in the economical sector, which is at the forefront of details technology as effectively as know-how adoption.

 

In the new previous, offer chain attacks and ransomware attacks have strike the headlines additional routinely. As a result, it is not shocking that cyber chance is a single of the topmost worries of governments, corporations, and shoppers. In the fiscal sector, facts confidentiality and integrity as effectively as the clean operating of data units, are constantly threatened by cyber attackers. This produces a threat to financial stability—and is a single that needs focus. Financial units are at various states of readiness to deal with this sort of assaults, and the intercontinental reaction is fragmented. Our panel dialogue will go over the hottest IMF investigation in this region, which has identified big gaps that, if tackled, could considerably minimize cyber danger, and assistance safeguard international financial steadiness.

 

Total, technological advances in finance really should be broadly welcome, collectively with preparations to seize their benefits and mitigate possible pitfalls to the money system’s integrity and security. But a lot of ways are wanted to bolster domestic and international coverage frameworks on details, artificial intelligence, and cybersecurity to advertise cooperation amid nations and regulators, and to construct ability.

 

I look forward to discussing these issues with our distinguished panel right now.

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IMF Communications Office
MEDIA RELATIONS

Push OFFICER: Nadya Saber

Cell phone: +1 202 623-7100E-mail: [email protected]

@IMFSpokesperson

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